Cryptospace Spotlight 2022 #20 (15 May 2022)
Terra’s Luna and UST triggered cryptospace meltdown, Fortress has suffered $3M loss and Yellen doubled down on her plea for stablecoin regulation!
Terra’s Luna and UST - the spiral of death event
How the attack could potentially looks like. Profit from it and trigger a death spiral.
An article on the backdrop and unfolding of UST and Luna. [more]
A tweet on how the Soros style attack would look like with a $800M gain. [more]
Another twitter user brought up his old tweet in 2021 on how this could be done with $1B capital. [more]
An article followed the tokens flow and pointed that they ended up in Coinbase. [more]
Who could be the attacker - Hedge funds accused. Citadel Securities, BlackRock, Gemini denied social media accusations of involvement with UST collapse. [more]
The conspiracy theory alleges that money manager BlackRock (BLK) and market maker Citadel Securities borrowed 100,000 bitcoin (BTC) from the Gemini cryptocurrency exchange and swapped 25% for UST. Then the two companies dumped the UST and BTC, crashing UST's sister LUNA token along with the price of bitcoin.
Collateral damages to the ecosystems from crypto exchanges to DeFi projects. [more]
Terra community halts the blockchain twice to protect as they remediate. [more][more-2]
The LUNA supply expanded from 1 billion a week ago, to some 40 billion by the time the chain was halted.
As the supply expands, the percentage of LUNA staked with validators shrunk, which created a new risk: a governance attack.
Question remains over $3.5B Terra reserves. It is unclear whether these reserves were used to defend and support UST during the event. [more]
In Singapore, Reddit community is concerned about Hodlnaut exposure. Hodlnaut has since clarified that they are not over exposed. [more]
Technology and Industry
Crypto exchange Coinbase warned that its users might lose all the cryptocurrency stored in their accounts in the event of bankruptcy. [more]
Ethereum’s developers are using new testing infrastructure to assess network mechanics and client readiness ahead of the Merge. [more]
Instagram plans to support NFTs from Ethereum, Polygon, Solana, allowing users to display them on profile at no charge. [more]
Emirates Airline plans to add crypto payments and offer NFTs for trading on the company’s website. [more]
Chainalysis had raised $170 million of new funding, bringing its valuation to $8.6 billion. This sixth funding round was led by GIC, Singapore's sovereign wealth fund. [more]
Regulatory
United States - US Treasury Secretary Janet Yellen doubled down on her plea for stablecoin regulation. [more]
Germany - Crypto investors in Germany won’t pay tax on sales of digital assets (such as bitcoin and ether) as long as they’re held for more than one year. [more]
Spain - The market regulator, National Securities Market Commission (CNMV), has recently “forced” Binance to “completely abandon the sale of cryptoasset derivatives in Spain.” [more]
China - The Shanghai High People’s Court has declared bitcoin to be a virtual asset protected by Chinese law. The court notes that the cryptocurrency has economic value. [more]
According to Ashley Alder, chair of the International Organization of Securities Commissions (IOSCO), an association of market regulators, the joint body tasked with coordinating crypto regulation globally is sorely needed and could become a reality within the next year. [more]
Security and Risk
8 May - 6 months after Pickle Finance being exploited. 1,800 ETH of the stolen funds laundered via TornadoCash. [more]
9 May - DeFi protocol Fortress has suffered an oracle price manipulation attack through the passing of adversarial governance proposal. This has resulted in the loss of all of its funds worth around $3 million. [more][more-analysis]
The attacker purchased FTS tokens – the governance token managing the FTS protocol.
The attacker passed the proposal ID 11, which changed the collateral factor on FTS tokens within loan contracts from 0 to 700,000,000,000,000,000. He also updated the price oracle used by the loan contract such that the token’s price would update, even if voting power was zero.
The quorum votes on Fortress loans’ governance contract is 400,000 FTS. That was worth just $18,000 at the time of the attacker.
The attacker was able to borrow large amounts of other tokens from the loan contracts. After which, the attacker converted borrowed tokens to ETH and DAI, and sent them to TornadoCash
14 May -
Decentralized exchange Quickswap warned that it has came under domain hijack attack for a vulnerability in its hosting provider GoDaddy. [more]
MetaMask phishing attack noted on various crypto platforms (such as Etherscan and CoinGecko) may be connected to the compromise of Coinzilla, an advertising and marketing agency. [more] [more-analysis]